MF Global gets court approval to liquidate

By The Associated Press

April 5, 2013 05:53 PM

By The Associated Press

April 5, 2013 05:53 PM

MF Global's parent company has won court approval for its liquidation plan.

Judge Martin Glenn approved the plan Friday in U.S. bankruptcy court in Manhattan. MF Global Holdings Ltd. collapsed in late 2011 after a calamitous bet on bonds issued by debt-burdened European countries.

MF Global had more than $41 billion in assets. Its collapse was the eighth-largest corporate bankruptcy in U.S. history and the biggest on Wall Street since the September 2008 collapse of Lehman Brothers that set off the financial crisis.

Creditors to MF Global Holdings, the parent company, have not been paid for their losses, but the plan approved Friday lays out how they will get their money. Former FBI director Louis Freeh is acting as their trustee, which means he is trying to recover the money that the creditors are owed.

MF Global also owed money to customers, including farmers, ranchers and other business owners who used the company to hedge their risks against fluctuating crop prices. When the company collapsed, more than $1 billion in customer money was discovered to be missing.

About 89 percent of the money owed to U.S. customers has been distributed, and 18 percent for foreign customers, according to James Giddens. He's the trustee in charge of recovering money for customers from the broker-dealer, MF Global Inc.

The judge's approval of the liquidation plan for the parent company comes a day after Freeh filed a report lambasting MF Global's former CEO Jon Corzine and other top managers, saying they had ignored the warnings of their chief risk officer.

A spokesman for Corzine on Thursday strongly refuted Freeh's report, saying "there was "no basis for the suggestion that Mr. Corzine breached his fiduciary duties or was negligent." Instead, he blamed the failure of banks and other firms that MF Global traded with.

Corzine, who had been co-chairman of Goldman Sachs as well as a former Democratic U.S. senator and governor of New Jersey, stepped down as MF Global CEO in November 2011.

Giddens last year joined a lawsuit against Corzine and other former executives brought by MF Global customers. MF Global shareholders also have sued Corzine and other executives.

No one has been charged in the MF Global case. Federal regulators, Congress and a federal grand jury in Chicago have investigated MF Global's failure and the disappearance of customers' money.